Governments can inflate their way out of debt, but that has consequences, doesn't it?
Sentiment: NEGATIVE
I don't mind the government accruing debts as long as every dollar is spent effectively with a high return. That works out fine. If you accumulate debts and waste your money, that's, of course, a disaster.
No country can be complacent in making sure that excessive debt of the household doesn't create excesses and weaknesses in the financial system. Everything is interconnected.
The moment a large investor doesn't believe a government will pay back its debt when it says it will, a crisis of confidence could develop. Investors have scant patience for the years of good governance - politically fraught fiscal restructuring, austerity and debt rescheduling - it takes to defuse a sovereign-debt crisis.
The problem is that the U.S. government is the biggest debtor in the world, and those depending on it to take care of them will only become poorer.
We know that advanced economies with stable governments that borrow in their own currency are capable of running up very high levels of debt without crisis.
Massive debts owed to foreign creditors weaken our global influence and threaten high inflation and steep tax increases for our children and grandchildren.
It is incumbent on every generation to pay its own debts as it goes. A principle which if acted on would save one-half the wars of the world.
It is simply science fiction fantasy to say that, if you do not raise the debt ceiling, that everything is going to collapse.
In a world awash in debt, power shifts to creditors.
To win elections, politicians have promised practically endless government spending and covered up the cost, leaving generations of taxpayers obligated to pay off the debt. That's wrong, but neither the U.S. nor Europe has a plan to stop it.
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